Malaysia ranks third in global retail investment

KUALA LUMPUR: A global management consulting company has placed Malaysia in third position for retail investment worldwide for the second successive year.

AT Kearney Partner and Head of South-East Asia, Soon Ghee Chua said that the firm’s 2017 Global Retail Development Index (GRDI) had placed Malaysia behind China and India, driven by an influx of tourists, higher disposable income and government investments in infrastructure, all of which have provided a boost to the retail industry.

“Retail sales in Malaysia grew 3.8% in 2016, driven in large part by a 6.1% increase in private consumption despite the headwinds of a depreciating currency,” he said in a statement yesterday.

He said Malaysia”s retail market continued to grow despite a slight dip in overall gross domestic product growth and short-term pressures of currency fluctuation and inflation.

“The long-term prospects of the sector continue to remain strong,” he said.

He said Malaysia’s successful performance in this year”s GRDI was consistent with the increased interest foreign retailers were showing in this market, in both traditional and online channels.

“Aggressive moves are being made in the convenience segment by companies such as Japanese retailer Aeon which is set to triple its number of stores in Malaysia to 150 within the next three years,” he said.

Soon said tourism was a cornerstone of the government”s long-term growth plan, and the number of tourists was projected to grow from 26 million in 2016 to 36 million by 2020.

The numbers were expected to be boosted by Chinese travellers, who have been granted visa-free entry since March 2016, he added.

Meanwhile, Soon said that online retail was expected to grow at 23% per year through 2021, driven by electronics and media.

He said the growth in online retail, along with the rise in mobile phone adoption across the nation, would continue to provide momentum to the sector”s growth and attract further investment.

“The government’s continued efforts to position Malaysia as a hub for cross-border e-commerce is another factor that plays an important part in Malaysia”s retail growth story,” Soon said.

One of the initiatives was the establishment of the world’s first Digital Free Trade Zone in Malaysia, in collaboration with Alibaba.

“As part of the agreement, Alibaba will set up a regional fulfillment hub in Kuala Lumpur and a one-stop cross-border online trading platform, which will allow Malaysia”s small and medium-size enterprises to sell online with transactions fulfilled through Alibaba,” he said.

The increased reach of e-commerce was also helped by the government’s US$280mil plan to roll out high-speed broadband access to rural areas, he added.